Let’s say, hypothetically speaking, that you’re looking to make a splash in the travel market. Sure, you already might have some products which allow your users to display a boarding pass or track flight status, but you are always thinking bigger. You want to have a fully integrated reservations system, not just displaying bookings made elsewhere; you want to fully own the process. You’ve also got a few patents which seem overly broad in some ways, but which should cover the unified booking, management and actual travel process through a single interface. Oh, and you’ve also got more than $145 billion sitting around, looking for a useful outlet. What’s your next move?
The key component to the booking and management process is the Global Distribution System (GDS) platforms which work as the middle-men between travelers and service providers. There aren’t too many players in that space and there are plenty of reasons to be wary of their profit potential, especially from the airline side of things. Still, if you want to build a massive travel solution having your own GDS is a pretty efficient way to approach the situation. Why bother negotiating API integration and fee structures when you can simply own the whole platform? Especially when there are other, ancillary benefits which might come with that purchase?
There are arguably three major players in the online consumer market today: Microsoft, Google and Apple. In April 2008 Microsoft purchased Farecast, integrating the historical fare data and prediction algorithms into their Bing Travel platform. Google made their move a couple years later, snapping up ITA Software in 2010. The ITA platform is much closer to a full GDS than what Farecast offered, though it doesn’t have the direct-to-consumer front-end aspect of things in place. Apple has been competing with Google in many areas recently and getting a leg up in the travel space – a market with huge amounts of money (and customer affinity) in play – is not such a bad idea. The only real company in play right now is Sabre and the company is once again raising the idea of launching their IPO; if Apple wants in on the action now is the time to act.
To be fair, the patent details are mostly focused on how to use NFC or similar technologies for the passengers’ mobile devices to talk with other systems so that check-in and boarding can be handled more smoothly, not about the overall booking process. But making reservations is mentioned several times and, if history is any indicator, Apple’s desire to control the whole process makes this sort of transaction quite feasible. Building a fully integrated booking interface from scratch is a ridiculously complicated undertaking and there is very little up-side to that approach. Apple would still have to negotiate access to all the underlying data, in addition to building out the management and processing systems and user-facing interfaces. That last bit is likely something they would want to redo anyways, but the back-end stuff is major work and buying a functional version in situ is a nice way to get a head start. It is also worth noting that Sabre is a lot more than just the GDS platform. Through its history Sabre has acquired or launched many other businesses, including travel agencies, online communities (IgoUgo) and booking engines (Travelocity). Yes, buying them outright would have a significant cash cost, but getting all the parts at once rather than assembling them piece-meal means the project would be live much sooner.
If Apple is going to get into this market they’re already facing an uphill battle. Roughly 75% of the travel agency market (including OTAs) is dominated by 4 key players. To break in to that space would require a disruptive shift, the type of move Apple has embraced in the past. They could play it slow, depending on travel providers to integrate into their Passbook application but the adoption has been somewhat slow. Also, there isn’t a ton of upside for the company for depending on partners to integrate into their ecosystem; Apple likes to control the whole experience. If Apple wants in on the hundreds of billions of dollars in annual online travel revenue, going slow into the market is a bad move.
Is Apple going to buy Sabre? I honestly have no idea. But there are rumors of such circulating (I didn’t come up with all of this all by myself) and, quite frankly, it wouldn’t be the stupidest thing they’ve ever done.
It sure is fun to imagine what they could accomplish if they did, though…
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